The following events all occurred after the balance sheet date (6/30/17)but prior to the auditor's report (9/10/17).Which one would require an adjustment to the account balances as of 6/30/17?
A)client will market a new series of equity securities ($2 million of preferred shares)on 8/1/17
B)unused equipment on the books at 6/30/17 for $100 000 was disposed of 7/31/17 for $60 000
C)securities costing $30 000 held for temporary investment on 6/30/17 declined in value by one-third when the market took a plunge on 8/15/17
D)inventory valued at $100 000 on 6/30/17 was destroyed in a fire on 8/1/17

Question

Quizplus · Accepted Answer

The disposal of unused equipment for $60,000 on 7/31/17, when it was on the books for $100,000 as of 6/30/17, requires an adjustment to the account balances as of 6/30/17. This is because the event provides additional information about the condition of the asset as of the balance sheet date.

The Following Events All Occurred After the Balance Sheet Date